FIDIC WORKSHOP2016

GROUP 6

QUESTION 1

WHAT ARE THE ESSENTIAL REQUIREMENTS FOR FORMATION OF CONTRACT? DISCUSS WHETHER A BINDING AND ENFORCEABLE

CONTRACT HAS BEEN CONCLUDED BETWEEN JOLLY AND CAN-DO.

• 1. TENDERS AS OFFERS. • The building owner who invites tenders is only indicating an intention to receive

(invitation to treat) tenders for a particular project. When a contractor submits his tender, his tender is an offer made to the owner. Until the offer is duly accepted, no contractual obligations arise. In a contract, each party must have given consideration for the promise.

• 2. QUALIFICATIONS IN A TENDER SUBMITTED. • Quite often, tenderers may consider certain aspect of the design to be

unnecessarily costly or decide that certain contract conditions to be commercially inefficient or impose undue risks. In this case, the tenderer may seek to qualify the tender by excluding or amending certain conditions which he considers may increase the attractiveness of his tender. Where a contractor submits his tender with qualifications and the tender is successful, the question which often arises is whether the contract as awarded incorporates these qualifications.

• 3. ACCEPTANCE OF TENDER• A tender (offer) may be accepted any time after it is made. Generally, the tender is open for a period

of time which is called the tender validity period. Upon the expiry of the stipulated period, the offer lapses and can no longer be effectively accepted. The general principle of common law is that an offer can be withdrawn any time before acceptance unless there is a separate undertaking to keep the offer open. It is common for tenderers to pay a tender deposit which can be forfeited in the event that the tenderer withdraws his tender before the expiry of the offer period. The acceptance of an offer must be unambiguous and must be communicated to the tenderer before a contract can be made. Acceptance may be implied by conduct. This principle is codified in section 8 of the contracts act 1950.

• 4. LETTER OF INTENT• Once the owner has selected the contractor, he may communicate his decision by issuing a letter of

intent which is understood that the owner intends to award the contract to the contractor. Although a letter of intent is usually stated to be nonbinding, the purpose here is to provide the contractor with some degree of assurance to persuade him to commence the mobilization of resources for the project. Contractor may also deem it a sufficient basis to place orders for materials which requires long lead time.

• 5. ESSENTIAL TERMS OF AGREEMENT. • Lord Blackburn in Rossiter v Miller (1878) held that if some particulars essential

to the agreement still remain to be settled afterwards, then there is no contract. Normally, an agreement requires the parties, price, time and description of works(scope of works) as the minimum necessary for a contract to be workable.

• 6. LETTER OF AWARD. • The formal letter of award can be issued by the owner once both parties have

agreed on the principal terms of the contract. The letter is usually incorporated as part of the contract document. Quite often, the letter of award may be issued even though not all terms have been agreed between the parties, e.G. The definitions of milestones within a programme, insurance and performance bonds to be subject of negotiations until after the works have commenced. The typical contents in the letter of award are follow under contract act of section 6.1 to section 6.7

Answer :• There is an enforceable contract between Jolly and Can-do. In the event of Can-

do(contractor) was given possession of the site by Jolly(client) and instructed to commence the work. Although, there was no letter of acceptance was signed but Can-do(contractor) had begun the work while the contract documents were being prepared and finalized for signing. Under red book of FIDIC in section 1.1.1.3, “letter of acceptance” means the letter of formal acceptance, signed by the employer, of the letter of tender, including any annexed memoranda comprising agreements between and signed by both parties. If there is no such letter of acceptance, the expression “ letter of acceptance” means the contract agreement and the date of issuing or receiving the letter of acceptance means the date of signing the contract agreement. In such case, Bang-Bang(project manager) requested Can-do to expedite the preparation of the contract documents for signing. The bound contract documents incorporated all the correspondence and documents listed in the letter of acceptance. In Event that MrJoll (client) would be in the country brief stopover and inform Bang-bang(PM) requested Can-dp(contractor) to expedite the preparation of the contract documents for signing.

CASE LAW• The classic case of Trollope & Colls Ltd V Atomic Power Construction Ltd (1963)

support this situation where the subcontractors were notified of changes to the works after their submission of tender. They were instructed to commence work on the following terms: ‘as soon as matters outstanding between us are settled we will enter into a contract agreement with you, and in the meantime please accept this letter as an instruction to proceed …’ although no contract was actually signed, the english court held that a contract came into existence when the contractor commenced work.

QUESTION 2

ADVISE JAZZY ON THE VALIDITY OF CAN-DO’S CLAIM FOR EXTENSION OF TIME AND

ADDITIONAL PAYMENT ARISING FROM THE COLLAPSED TEMPORARY WORKS.

• Based on the red book FIDIC in section 20.1_contractor’s claim; if the contractor considers himself to be entitled to any extension of the time of completion and or any additional payment, under any clause of these conditions or otherwise in connection with the contract, the contractor shall give notice to the engineer, describing the event or circumstances giving rise to the claim. The notice shall be given as soon as practicable, and not later than 28 days after the contractor become aware, or should have become aware, of the event or circumstance. If the contractor fails to give notice of a claim within such period of 28days, the time for completion shall not be extended, the contractor shall not be entitled to additional payment and the employer shall be discharged from all liability in connection with the claim.

Answer :

• Base on the situation, the contractor considers himself to be entitled to claim for extension for time and additional payment. The reasons behind his claim as described states that the collapse temporary works was due to the changes in design and method statement made by the engineer instruction where as their initial temporary works design would have been able to sustain during the national phenomenon, under 23.1 and 23.8(a) relevant events_force majeure of the PAM contract form 2006. Thus, they considers themselves entitled to claim for the delay 7 days given the reason that the collapsed temporary works was due to the engineer change in design and method statement towards their initial temporary work design. • However, the contractor is not entitled to claim for EOT or additional payment because

he failed to notify the engineer about the collapsed temporary works within 28 days of the incident that the contractor has become aware of consider as stated in section 20.1; even if the mistake of changing the design and method was done by the engineer. As a conclusion, the contractor claims for EOT is invalid

QUESTION 3

HOW SHOULD JAZZ RESPOND TO CAN-DO WITH REGARD TO THE LATTER’S CLAIM FOR

EXTENSION OF TIME FOR THE DELAY CAUSED BY THE RAIN?

• Under Red Book FIDIC in section 8.4 (b) extension of time for completion stated that the contractor shall be entitled subject to extension of the time for completion if the completion will be delayed by the exceptionally adverse climatic conditions. In this case, the works have been suffer exceptionally heavy rain and con-do (contractor) has submitted the claim for extension of the time completion 40 days after the event. Under Red Book FIDIC in section 20.1 contractor’s claims stated that extension of time for completion and additional payment, the contractor shall give notice to the engineer. The notice shall be given not later than 28 days from the event or circumstances. If the contractors fails to give notice of the claim within such period of 28 days, the extension for completion shall not be extended. In this case, the engineer still granted 7 days extension of time to the contractors although the contractors submit the notice of claim for extension of time 40 days after the event or circumstances. Therefore, the contractor shall not be entitled for any extension of time. Moreover, in the contract, the jolly has instructed gulp to delete the sub-clauses on exceptionally adverse climatic condition. As a conclusion, contractor shall not entitled for any extension of time.

• Under PAM form clauses 23.0 submission of notice and particulars for extension of time, if the contractors think that the works will be delayed beyond the completion date by any of the relevant events stated in clauses 23.8, he may apply for an extension of time. The contractors shall give written notice within 28 days. In this case, there is exceptionally heavy rain in the site, which referred in relevant events in clause 23.8 (b) exceptionally inclement weather. The contractor submitted the notice 40 days after the event. Which mean it exceed the time period to submit the notice of extension of time.

QUESTION 4

IF THE STANDARD FORM OF CONTRACT IS THE AGREEMENT AND CONDITIONS OF PAM CONTRACT 2006 (WITHOUT QUANTITIES), ADVICE PICASSO, IN THEIR CAPACITY AS AN ARCHITECT, ON THE PROCEDURE FOR DEALING WITH THE EXTENSION OF TIME ARISING FROM THE INSTRUCTION FOR FURTHER CHANGES TO THE

APARTMENT TYPE MIX AND HOW THEY SHOULD RESPOND TO THE REQUEST FROM CAN-DO SINCE THE COMPLETION DATE HAS PASSED AND A CERTIFICATE OF NON-COMPLETION HAD ALREADY BEEN ISSUED

• Under standard form of contract PAM 2006 (without quantities) clause 23.9 (extension of time after the issuance of certificate of non-completion) stated that where a relevant event occurs after the issuance of the certificate of non-completion, the architect shall grant an extension of time. The extension of time granted shall be added to the completion date of the works or any section of the works. Whereas the contractor, can-do, struggled to complete the works and the time for completion already expired, as a result of CNP, he also suffered for liquidated damages. Plus, the relevant event supported by clause 23.8(e) which mentioned the contractor not having received in due time the necessary AI for which he had specifically applied in writing to the architect. The contractor’s application must be submitted to the architect in sufficient time before commencement of construction of the affected works, to enable the architect to issue the necessary AI within a period which would not materially affect the progress of the affected works, having regard to the completion date. Jolly requested jazz to instruct can-do to make further changes to the apartment. In order to follow the instruction, can-do requested for extension of time as they were not prepared to carry out the additional changes and time of completion had expired. In this case, Picasso, the architect, shall grant extension of time to can-do as the additional changes will affect the works as it is one of the relevant event stated in clause 23.8(e).

QUESTION 5

ADVISE JOLLY ON THE CONTRACTUAL IMPLICATIONS OF REPLACING ER JAZZY

AND APPOINTING THEIR OWN EMPLOYEE, ER JO-JO, AS THE NAMED

ENGINEER

• Under red book FIDIC in section 3.4 replacement of the engineer, if the employer intends to replace the engineer, the employer shall, not less than 21 days before the intended date of replacement, give notice to the contractor of the name, address and relevant experience of the intended replacement engineer. In this case, assuming jolly(client) wrote an email to can-do(contractor) stated that jolly(client) want to ceased Er Jazzy(engineering) work under the contract with immediate effect. Furthermore, jolly(client) want to replace Er Jazzy to Er Jo-Jo and acted as the engineer for the purpose of the contract. Thus, jolly(client) cannot replace Er Jo-Jo with immediate effect unless given notice not less than 21days and if the con-do(contractor) considers the intended replacement engineer to be unsuitable, the Can-do(contractor) may raise reasonable objection with supporting reasons to the Jolly(client). The Engineer acts as an agent of the employer and an individual certifier who is able to acts on his own opinion. In the case where Jolly appoint Er Jo-Jo who is one of his employee, the question would arise whereby whether Er. Jo-Jo can acts on his own opinion as a certifier without being interfered by his employer (Jolly) and might act unfairly towards the contractor.

6. PROCEDURE AND CONSEQUENCES FOR SUSPENSION OF WORKS.

FIDIC -CLAUSE 8.8 STATES THAT ENGINEER MAY AT ANY TIME INSTRUCT TO SUSPEND PROGRESS OF PART OR ALL OF WORK AND MAY NOTIFY THE CAUSE OF SUSPENSION. -CONTRACTOR SHALL PROTECT, STORE, SECURE WORKS AGAINST DETERIORATION, LOSS, DAMAGE.-CLAUSE 8.9 CONSEQUENCES OF SUSPENSION BASED ON THIS CLAUSE WHERE CONTRACTOR SUFFERS DELAY OR INCURS COST FROM COMPLYING WITH ENGINEER INSTRUCTION UNDER CLAUSE 8.8 AND OR FROM RESUMING WORK.-CLAUSE 20.1 AN EXTENSION OF TIME FOR SUCH DELAY OR PAYMENT OF ANY COST WHICH SHALL BE INCLUDED IN CONTRACT PRICE.-CLAUSE 3.5 AFTER RECEIVING THE NOTICE, THE ENGINEER SHALL PROCEED IN ACCORDANCE WITH THIS CLAUSE TO AGREE OR DETERMINE THESE MATTERS .-CLAUSE 8.11 IF THE SUSPENSION UNDER CLAUSE 8.8 CONTINUED FOR MORE THAN 84 DAYS, CONTRACTOR MAY REQUEST THE ENGINEER'S TO PROCEED AND IF THE ENGINEER DOES NOT GIVE PERMISSION WITHIN 28 DAYS AFTER BEING REQUESTED. CONTRACTOR MAY TREAT THE SUSPENSION AS AN OMISSION UNDER CLAUSE 13 OF THE AFFECTED PARTS OF WORKS AND IF IT AFFECT THE WHOLE WORK, THE CONTRACTOR MAY GIVE NOTICE OF TERMINATION UNDER CLAUSE 16.2 (TERMINATION BY CONTRACTOR).

-CLAUSE 16.1- IF ENGINEER FAILS TO CERTIFY IN ACCORDANCE TO CLAUSE 14.6 (ISSUE OF INTERIM PAYMENT CERTIFICATE)OR EMPLOYER FAILS TO COMPLY WITH CLAUSE 2.4 EMPLOYER'S FINANCIAL ARRANGEMENT) OR CLAUSE 14.7 (PAYMENT), THE CONTRACTOR MAY, AFTER GIVING NOT LESS THAN 21 DAYS NOTICE TO THE EMPLOYER, SUSPEND WORK UNTIL THE CONTRACTOR RECEIVE THE PAYMENT.-BASED ON THE INCIDENT GIVEN, CAN-DO CAN SUBJECT TO CLAIMS TO AN EXTENSION OF TIME FOR ANY SUCH DELAY OR PAYMENT OF ANY SUCH COST WHICH SHALL BE INCLUDED IN CONTRACT PRICE IF THE SUSPENSION OF WORK IS ORDERED BY THE ENGINEER. THEY COULD ALSO TERMINATE THEMSELVES IF THE SUSPENSIONS IS PROLONGED.

PAM 2006 (WITH QUANTITIES)-THERE'S NO CLAUSES WHICH SUPPORTS AN ENGINEER TO SUSPEND ANY WORK. -HOWEVER, CLAUSE 30.7 WHICH STATES THAT THE CONTRACTOR CAN SUSPEND WORK WHEN THE EMPLOYER FAILS OR NEGLECTS TO PAY THE CONTRACTOR THE AMOUNT DUE AS SHOWN IN PAYMENT CERTIFICATE. -CLAUSE 30.8 -STATES THAT IF THE ARCHITECT OR CONSULTANT INFORM THE CONTRACTOR IN WRITING OF THEIR WITHDRAWER FROM THE SUPERVISION OF THE EXECUTION OF THE WORKS REQUIRED UNDER THE LOCAL BUILDING BY-LAWS FOR WHATEVER REASON THE CONTRACTOR SHALL FORFEIT SUSPEND THE EXECUTION OF WORKS AND CONTINUE SUCH SUSPENSIONS UNTIL THE PRESUMPTION OF THE SAID SUPERVISION.-THE CONTRACTOR MAY SUSPEND ALL THE WORKS TILL THE HE RECEIVE THE PAYMENT OR ELSE HE CAN TERMINATE HIS OWN EMPLOYMENT.

7. ADVICE ON RESPONSE ON SUB-CLAUSES TO BE DELETED IN CONTRACT FORM.

- GULP SHOULD ADVICE JOLLY ON THE IMPLICATION ON REMOVING THE CLAUSE WHICH WERE RELEVANT TO THE EXTENSION OF TIME.

- THIS ACTION IS NOT ADVISABLE AS IF THERE'S NO EOT, THE EMPLOYER CANNOT SET A NEW COMPLETION DATE, THE CONTRACTOR OBLIGATION THEN IS TO COMPLETE IN A 'REASONABLE TIME' WHERE IT MAY TAKE A LONGER TIME TO COMPLETE BECAUSE THERE'S NO DEFINITE COMPLETION DATE TO WORK TOWARDS.

- THE PROJECT MAY COST MORE THAN THE ORIGINAL PRICE SET, AND LASTLY THE TIME OF COMPLETION IS NOW 'AT LARGE' AND EMPLOYER LOSES HIS RIGHT TO IMPOSE LD.

- THE PROJECT MAY COST MORE THAN THE ORIGINAL PRICE SET, AND LASTLY THE TIME OF COMPLETION IS NOW 'AT LARGE' AND EMPLOYER LOSES HIS RIGHT TO IMPOSE LD.

- THE CONTRACTOR SHALL TAKE NOTE THAT HIS RISK IS NOW HIGHER AS HE BEARS THE RISK OF DELAY CAUSE BY THE NEUTRAL EVENT AND TO INCREASE HIS CONTRACT SUM.

- IF THERE'S EOT, THE COMPLETION DATE CAN BE EXTENDED WHEN THERE'S A DELAY WHICH WILL SET A NEW COMPLETION DATE TO WORK TOWARDS TOO.

- IT ALSO PRESERVES THE EMPLOYER'S CONTRACTUAL RIGHTS SHOULD HE CAUSE WORKS TO BE DELAYED BY DEFAULT AND MOST IMPORTANTLY IT PREVENTS THE TIME FOR COMPLETION BEING AT LARGE.

- IF THE DELAY IS CAUSE BY THE EMPLOYER, TIME WILL NOT BE ENLARGED.

8. IN EVENT CAN-DO BECOMES INSOLVENTFIDIC-CLAUSE 15.2(E) - THE EMPLOYER SHALL BE ENTITLED TO TERMINATE THE CONTRACT IF THE CONTRACTOR BECOMES INSOLVENT. IN THIS CASE, THE EMPLOYER MAY BY NOTICE TERMINATE THE CONTRACT IMMEDIATELY WITHOUT GIVING 14 DAYS NOTICE TO THE CONTRACTOR , TERMINATE THE CONTRACT AND EXPEL THE CONTRACTOR FROM THE SITE. THE EMPLOYERS ELECTION TO TERMINATE THE CONTRACT SHALL NOT PREJUDICE ANY OTHER RIGHTS OF THE EMPLOYER, UNDER THE CONTRACT OR OTHERWISE.

-THE CONTRACTOR SHALL THEN LEAVE SITE AND DELIVER ANY REQUIRED GOODS, ALL CONTRACTOR’S DOCUMENTS AND OTHER DESIGN DOCUMENTS MADE BY OR FOR HIM TO THE ENGINEER. HOWEVER, CONTRACTOR SHALL USE HIS BEST EFFORTS TO COMPLY IMMEDIATELY WITH ANY REASONABLE INSTRUCTIONS INCLUDED IN THE NOTICE• FOR THE ASSIGNMENT OF ANY SUBCONTRACT• FOR PROTECTION OF LIFE OR PROPERTY OR FOR THE SAFETY OF THE WORK

• AFTER TERMINATION, EMPLOYER MAY COMPLETE WORKS AND/OR ARRANGE FOR ANY OTHER ENTITLES TO DO SO. THE EMPLOYER AND THESE ENTITLES MAY THEN USE ANY GOODS, CONTRACTOR’S DOCUMENTS AND OTHER DESIGN DOCUMENTS MADE BY OR ON BEHALF OF THE CONTRACTOR.•  THE EMPLOYER SHALL THEN GIVE NOTICE THAT THE CONTRACTOR’S

EQUIPMENT AND TEMPORARY WORKS WILL BE RELEASED TO THE CONTRACTOR AT OR NEAR THE SITE. THE CONTRACTOR SHALL PROMPTLY ARRANGE THEIR REMOVAL, AT THE RISK AND COST OF CONTRACTOR. IF CONTRACTOR FAILS TO MAKE PAYMENT BY THIS TIME TO THE EMPLOYER, THESE ITEMS MAY BE SOLD BY THE EMPLOYER TO RECOVER THIS PAYMENT. ANY BALANCE OF THE PROCEEDS SHALL THEN BE PAID TO THE CONTRACTOR .

PAM 2006 (WITH QUANTITIES)

-CLAUSE 25.4-IN THE EVENT THE CONTRACTOR BECOMING INSOLVENT, THE EMPLOYMENT OF THE CONTRACTOR SHALL BE FORTHWITH AUTOMATICALLY DETERMINED.

-CLAUSE 25.4 (A) - THE CONTRACTOR SHALL VACATE THE SITE AND RETURN POSSESSION OF THE SITE TO THE EMPLOYER WHO MAY EMPLOY AND PAY OTHER PERSON TO CARRY OUT AND COMPLETE THE WORKS AND TO MAKE GOOD ANY DEFECTS. SUCH PERSON MAY ENTER UPON THE WORKS AND USE ALL TEMPORARY BUILDINGS, CONSTRUCTION PLANT, TOOLS, MATERIALS AND GOODS INTENDED FOR, DELIVERED TO AND PLACED ON OR ADJACENT TO THE SITE (EXCEPT CONSTRUCTION PLANTS HIRED BY CONTRACTOR) AND MAY PURCHASE ALL MATERIALS AND GOODS NECESSARY FOR CARRYING OUT AND THE COMPLETION OF THE WORKS. THE CONTRACTOR IF SO REQUIRED BY THE EMPLOYER OR BY THE ARCHITECT ON BEHALF OF THE EMPLOYER SHALL WITHIN 21 DAYS OF THE DATE OF DETERMINATION, ASSIGN TO THE EMPLOYER THE BENEFIT OF ANY AGREEMENT FOR THE CONTINUATION OF THE HIRE OF CONSTRUCTION PLANT AND EQUIPMENT ALREADY ON THE SITE.

• CLAUSE 25.4 (B) - THE CONTRACTOR IS SO REQUIRED BY THE EMPLOYER OR ARCHITECT, SHALL WITHIN 21 DAYS OF DETERMINATION, ASSIGN THE EMPLOYER WITHOUT PAYMENT THE BENEFIT OF ANY AGREEMENT FOR THE SUPPLY OF MATERIALS, GOODS AND/OR FOR THE EXECUTION OF ANY WORK FOR THE PURPOSES OF THE CONTRACT TO THE EXTENT THAT THE SAME IS ASSIGNABLE.

• CLAUSE 25.4 ( C ) - THE CONTRACTOR WHEN INSTRUCTED IN WRITING BY ARCHITECT SHALL REMOVE THE WORKS ANY TEMPORARY BUILDINGS, CONSTRUCTION PLANT, TOOLS, EQUIPMENT, MATERIALS AND GOODS BELONGING TO OR HIRED BY HIM. IF WITHIN A REASONABLE TIME AFTER ANY SUCH INSTRUCTION HAS BEEN ISSUED TO CONTRACTOR, HE HAS NOT COMPLIED WITH, THE EMPLOYER MAY WITHOUT LIABILITY REMOVE AND SELL ANY SUCH PROPERTY BELONGING TO THE CONTRACTOR EXCEPT THOSE THAT ARE ON HIRE AND HOLD THE PROCEEDS LESS ALL COSTS INCURRED TO THE CREDIT OF THE CONTRACTOR.

• CLAUSE 25.4 (D) - THE CONTRACTOR SHALL ALLOW OR PAY TO THE EMPLOYER ALL COST INCURRED TO COMPLETE THE WORKS INCLUDING ALL LOSS AND/OR EXPENSE SUFFERED BY THE EMPLOYER. UNTIL AFTER THE COMPLETION OF THE WORKS UNDER CLAUSE 25.4(A), THE EMPLOYER SHALL NOT BE BOUND BY ANY PROVISION IN THE CONTRACT TO MAKE ANY FURTHER PAYMENT TO THE CONTRACTOR, INCLUDING PAYMENTS WHICH HAVE BEEN CERTIFIED BUT YET PAID WHEN THE EMPLOYMENT OF THE CONTRACTOR WAS DETERMINED. UPON COMPLETION OF THE WORKS, AND ACCOUNT TAKING INTO CONSIDERATION THE VALUE OF WORKS CARRIED OUT BY THE CONTRACTOR AND ALL COST INCURRED BY EMPLOYER TO COMPLETE THE WORKS INCLUDING LOSS AND/OR EXPENSES SUFFERED BY THE EMPLOYER SHALL BE INCORPORATED IN A FINAL ACCOUNT PREPARED IN ACCORDANCE WITH CLAUSE 25.6

QUESTION 9

ADVISE JAZZ ON THE MANNER IN WHICH THE EXTENSION OF TIME WAS PURPORTEDLY GIVEN

FOR THE RECONFIGURATION OF THE BEDROOMS.

ACCORDING TO PAM FORM 2006,• JAZZ IS THE CIVIL AND STRUCTURAL ENGINEER APPOINTED FOR THIS PROJECT.• CLAUSE 2.1 STATES THAT THE ARCHITECT IS EMPOWERED BY THE

CONDITIONS TO ISSUE INSTRUCTIONS• THUS, THE ARCHITECT IS THE CONTRACT ADMINISTRATOR

• JAZZ DOES NOT HAVE ANY CONTRACTUAL RIGHTS TO ADMINISTRATE THE CONTRACT, THUS CANNOT GRANT EXTENSION OF TIME

ACCORDING TO PAM FORM 2006,• ASSUME PICASSO WHICH IS THE CONTRACT ADMINISTRATOR IS

THE ONE WE ARE ADVISING.

• SCENARIO: “CAN-DO (CONTRACTOR) GAVE NOTICE OF DELAY AND REQUESTED FOR AN EOT FOR RECONFIGURATION OF THE BEDROOM 6 MONTHS AFTER THE VARIATION WORKS WERE ORDERED.”

• CLAUSE 23.1 (A) STATES THAT “THE CONTRACTOR SHALL GIVE WRITTEN NOTICE TO THE ARCHITECT HIS INTENTION TO CLAIM FOR SUCH EOT… WITHIN 28 DAYS FROM THE DATE OF THE AI”

• CLAUSE 23.1 (B) STATES THAT “…IF THE CONTRACTOR FAILS TO SUBMIT SUCH PARTICULARS WITHIN THE STATED TIME,… IT SHALL BE DEEMED THAT THE CONTRACTOR HAS ASSESSED THAT SUCH RELEVANT EVENT WILL NOT DELAY THE COMPLETION OF THE WORKS…”

ACCORDING TO FIDIC FORM,• SCENARIO: “CAN-DO (CONTRACTOR) GAVE

NOTICE OF DELAY AND REQUESTED FOR AN EOT FOR RECONFIGURATION OF THE BEDROOM 6 MONTHS AFTER THE VARIATION WORKS WERE ORDERED.”

• SUB-CLAUSE 20.1 STATES THAT “IF THE CONTRACTOR FAILS TO GIVE NOTICE OF A CLAIM WITHIN SUCH PERIOD OF 28 DAYS, THE TIME FOR COMPLETION SHALL NOT BE EXTENDED…”

ACCORDING TO PAM FORM 2006 & FIDIC FORM,

• CAN-DO (CONTRACTOR) IS NOT ENTITLED FOR EOT, AS • THE CONTRACTOR GAVE LATE NOTICE OF DELAY (6 MONTHS INSTEAD OF 28 DAYS FROM THE DATE OF

THE EVENT)• NOTICE OF DELAY IS A CONDITION PRECEDENT OF ANY EOT ENTITLEMENT

• JAZZ SHOULD NOT HAVE GRANTED THE EOT REQUESTED.• HOWEVER, AS THE CLAUSES FOR EOT IN THE FIDIC HAS NOW BEEN DELETED ON JOLLY’S

INSTRUCTION AND VARIATION FALLS UNDER THE CATEGORY OF DELAY BY EMPLOYER, THE TIME WOULD BE AT LARGE

• WHEN TIME IS AT LARGE, JAZZ SHOULD ASSESS THE REASONABLE TO COMPLETE SUCH WORKS AND IF SUCH WORK IS NOT COMPLETED IN TIME, JOLLY CAN SUE THE CONTRACT UNDER COMMON LAW AS THE DELAY DAMAGES NO LONGER APPLIES.

• IN THIS CASE, JAZZ SHOULD ACT ON HIS OWN OPINION AS AN INDEPENDENT CERTIFIER AND NOT SUBJECT TO APPROVAL OF JOLLY (THE EMPLOYER).

QUESTION 10a) ADVISE JAZZ ON WHAT THEY HAVE TO DO AND ON THE CONSEQUENTIAL

EFFECTS IF JOLLY WISHES TO TAKE OVER PART OF THE WORKS BEFORE COMPLETION OF THE WHOLE WORKS.

b) IF THE CONTRACT FORM IS THE AGREEMENT AND CONDITIONS OF PAM CONTRACT 2006 (WITH QUANTITIES), HOW WILL YOU ADVISE PICASSO? ANSWER THE QUESTION ON THE ASSUMPTION THAT NO CERTIFICATION OF NON-COMPLETION HAS BEEN ISSUED BY PICASSO.

QUESTION 10 (A)• THIS QUESTION IS RELEVANT TO SUB-CLAUSE 10.2 OF FIDIC CONDITIONS OF

CONTRACT FOR CONSTRUCTION.• JAZZ SHALL ISSUE A TAKING-OVER CERTIFICATE FOR THE PART OF WORK THAT

JOLLY WISHES TO TAKE OVER BEFORE THE COMPLETION OF WHOLE WORK• UPON ISSUANCE, CAN-DO SHALL BE GIVEN EARLIEST OPPORTUNITY AND

SHALL CARRY OUT TESTS ON COMPLETION AS SOON AS PRACTICABLE BEFORE THE END OF DEFECTS NOTIFICATION PERIOD.

• JOLLY SHALL NOT USE PART OF THE WORK BEFORE THE ISSUANCE OF TAKING-OVER CERTIFICATE

QUESTION 10 (A) WHAT IF JOLLY USED THE PART OF WORK BEFORE THE ISSUANCE?

• THE PART WHICH IS USED WILL BE DEEMED TO HAVE BEEN TAKEN OVER• THE RESPONSIBILITY NOW LIES ON JOLLY, NOT CAN-DO• CAN-DO CAN REQUEST JAZZ TO ISSUE THE TAKING-OVER CERTIFICATE

QUESTION 10 (A)CONSEQUENTIAL EFFECT:

• DAILY RATE OF DELAY DAMAGES PROPORTIONATELY REDUCED• DEFECTS NOTIFICATION PERIOD STARTS [SUB-CLAUSE 11.1]• CARE OF PARTS ENDS EXCEPT IN RESPECT OF ANY OUTSTANDING WORK• SITE POSSESSION RETURNS TO EMPLOYER EXCEPT ACCESS TO COMPLETE

OUTSTANDING WORK• OBLIGATION TO INSURE AND MAINTAIN INSURANCE COVER ENDS

QUESTION 10 (A)CONSEQUENTIAL EFFECT (CONT’D)

• FIRST HALF OF THE RETENTION MONEY CERTIFIED AND PAID FOR THE PART [SUB-CLAUSE 14.9]

• 84-PERIOD FOR SUBMISSION OF STATEMENT AT COMPLETION STARTS [SUB-CLAUSE 14.10]

• NO FURTHER VARIATION CAN BE ISSUED [SUB-CLAUSE 13.1]

QUESTION 10 (B)• THIS QUESTION IS RELEVANT TO CLAUSE 16 OF PAM CONTRACT 2006.• PICASSO SHALL GIVE WRITTEN NOTICE OF INTENTION TO TAKE PARTIAL

POSSESSION TO CAN-DO• PICASSO SHALL IDENTIFY PART TO BE TAKEN OVER• HE SHALL MAKE SURE THAT THE CONTRACTOR HAS GIVEN HIS CONSENT• HE SHALL ALSO ISSUE THE CERTIFICATE OF PARTIAL COMPLETION WITHIN 14

DAYS OF TAKING PARTIAL POSSESSION AS STATED IN CLAUSE 16.1(A)

QUESTION 10 (B)CERTIFICATE OF PARTIAL COMPLETION SHALL INCLUDE

• DATE OF PARTIAL POSSESSION• LAYOUT PLAN TO IDENTIFY THE OCCUPIED PART• ESTIMATED VALUE OF OCCUPIED PART

QUESTION 10 (B)CONSEQUENTIAL EFFECTS:

• EFFECT OF PRACTICAL COMPLETION IS APPLIED ON THE TAKEN PART [CLAUSE 16.1(B)]

• DEFECT LIABILITY PERIOD COMMENCED FOR THE OCCUPIED PART• LIQUIDATED DAMAGES REDUCED BY RATIO OF ESTIMATED VALUE OF OCCUPIED

PART TO CONTRACT SUM [CLAUSE 16.1(C)]• ISSUE PAYMENT CERTIFICATE TO RELEASE HALF OF RETENTION SUM WITHIN 14

DAYS BY RATIO OF ESTIMATED VALUE OF OCCUPIED PART TO CONTRACT SUM [CLAUSE 16.1(D)]

QUESTION 10 (B)CONSEQUENTIAL EFFECTS:

• DLP ENDS EARLIER, ISSUANCE OF CERTIFICATE OF MAKING GOOD DEFECTS UPON ENDING OF DLP FOR OCCUPIED PART

• ISSUE PAYMENT CERTIFICATE OF 2ND HALF OF RETENTION SUM WITHIN 14 DAYS AFTER CMGD

CALCULATION ON RETENTION SUM/MONEY

• ASSUMING THE PART TAKEN OVER HAS AN ESTIMATED VALUE OF RM 20,200,200.00

• MAXIMUM RETENTION ASSUMED TO BE 5 %, CALCULATION FOR FIDIC WILL BE AS FOLLOWED:

• RM20,200,200.00/RM80,800,800.00 X RM4,040,040.00 X 40%

• = RM404,004.00

• AS FOR PAM, THE CALCULATION WILL BE

• RM20,200,200.00/RM80,800,800.00 X RM4,040,040.00 X ½

• =RM505,005.00

CALCULATION FOR DELAY/LIQUIDATED DAMAGE

• FOR FIDIC AND PAM• RM20,200,200.00/RM80,800,800.00 X RM1,000,000.00• = RM250,000.00• THE DELAY DAMAGE TO BE IMPOSED = RM1,000,000.00-RM250,000.00= RM750,000.00

QUESTION 11DISCUSS JAZZ’S ACTION TO ISSUE AN

INSTRUCTION TO OMIT PORTIONS OF THE WORKS FROM CAN-DO’S CONTRACTED

SCOPE SO THAT ANOTHER CONTRACTOR CAN BE ENGAGED TO CARRY OUT THE

OMITTED PORTIONS.

PAM Form 2006 (With Quantities) assume Engineer is Architect

A certain portion of works have been omitted from the Engineer’s Instructions assigned to Can-Do and have been arranged for another contractor to carry out the omitted works.

From the point of view of the Contractor:As stated in Clause 6.1, all works, materials, goods and workmanship shall be of the respective quality and standards described in the Contract Document. According to Clause 6.5, In the case where it is not up to quality, the consultant admin maya) Remove the materials from siteb) To demolish and reconstructc) To rectify such work as AId) To submit a method statement within 7 days of receipt of the written instructionse) To leave all works with the consent of the employer together with the appropriate set-off

As stated in Clause 15.3(b), 15.4, 15.5, 29.1, 30.4 if the Contractor, Can-Do fails to attend to the defects, the employer may employ and pay other Person to rectify the defects. All defects not made good by the Contractor shall be set-off.

FIDIC Contract Form

Based on Clause 4.9, the contractor shall institute a quality assurance system to demonstrate compliance with the requirements of the Contract. Compliance with the quality assurance system shall not relieve the Contractor of any of his duties, obligations or responsibilities under the Contract, which in this case Can-Do did not comply with the quality assurance system.

Based on Clause 7.6, if the Contractor fails to comply with the instructions, the Employer, Jolly is entitled to employ and pay other Person to carry out the work. Except to the extent that the Contractor would have been entitled to payment for the work, the Contractor shall subject to Sub-Clause 2.5 pay to the Employer all costs arising from this failure.

 

11.Discuss Jazz’s action to issue an instruction to omit portions of the works from Can-Do’s contracted scope so that another contractor can be engaged to carry out the omitted portions.

QUESTION 12

ADVISE JOLLY (EMPLOYER) ON THEIR RIGHTS IN RESPECT OF THE FAILURE OF THE MEMBRANE ROOFING WORKS.

12.Advise Jolly (Employer) on their rights in respect of the failure of the membrane roofing works. PAM Form 2006 (With Quantities)

Due to the failure of the membrane roofing works, Jolly has the rights to set-off all cost incurred for loss and expense which such as stated Clause 30.4 where the contractor is in breach of the followings:

a) Under clause 15.3(b) where failure to comply with his undertaking to rectify minor defects, Jolly is able to engage other Person to execute the works to give effect to the contractor’s said undertaking. All cost including loss and expense shall be set-off by the employer.

b) Besides, under clause 15.3(c), Jolly can accept the defects as it is, but subject to an appropriate set-off against the contractor, Can-Do.

FIDIC Contract Form

Under Clause 11.3, Jolly shall be entitled subject to Sub-Clause 2.5 to an extension of the Defects Notification Period for the Works or a Section if and to the extent that the Works, Section or a major item of Plant cannot be used for the purposes for which they are intended by reason of a defect or damage. However, a Defects Notification Period shall not be extended by more than two years.

Since the Defects Notification Period had expired, under Clause 11.10 also stated that each Party shall remain liable for the fulfilment of any obligation which remains unperformed at that time; and as for the purposes of determining the nature and extent of unperformed obligations, the Contract shall be deemed to remain in force.

12.Advise Jolly (Employer) on their rights in respect of the failure of the membrane roofing works.

QUESTION 13

WHAT ARE THE DUTIES AND OBLIGATIONS OF JAZZ AND CAN DO FOLLOWING RECEIPT OF THE NOTICES FROM THE LATTER ON THEIR CLAIM FOR EXTENSION OF TIME AND ADDITIONAL PAYMENT.

FIDIC

IN ACCORDANCE TO CLAUSE 20.1

• JAZZ HAS 42 DAYS FROM RECEIPT OF FULLY DETAILED CLAIM TO RESPOND WITH HIS APPROVAL, DISAPPROVAL OR DETAILED COMMENTS, AND MAY ALSO REQUEST FURTHER PARTICULARS.

• CAN DO (CONTRACTOR) IS OBLIGED TO KEEP CONTEMPORARY RECORDS TO SUBSTANTIATE THE CLAIM. JAZZ (ENGINEER) MAY MONITOR RECORD KEEPING AND INSTRUCT IF NECESSARY, FURTHER RECORDS FROM CAN DO.

• CAN DO SHOULD ALLOW INSPECTION OF RECORDS AND IF REQUESTED, SUBMIT COPIES TO JAZZ.

• IF DELAYING EVENT HAS NO CONTINUING EFFECTS, CAN DO SUBMITS FINAL ACCOUNT OF CLAIM WITHIN 28 DAYS OF CESSATION OF EFFECTS ( OR SUCH PERIOD APPROVED BY JAZZ)

• IF EVENT IS CONTINUING, CONTRACTOR SUBMITS INTERIM ACCOUNT AT INTERVALS AS REQUIRED BY JAZZ.

• IN THE ABSENCE OF ANY AGREEMENT BETWEEN JOLL (EMPLOYER) AND CAN DO, JAZZ DETERMINES FAIR EXTENSION AND NOTIFIES CONTRACTOR.

• JAZZ HAS TO TAKE INTO ACCOUNT DELAY CAUSES AND EFFECT OF A REVIEW OF ANY PREVIOUS DETERMINATIONS OF TIME EXTENSIONS WHICH MAY RESULT IN AN INCREASE, BUT NOT A DECREASE, IN THE TOTAL TIME EXTENSION.

• AGREE OR MAKE FAIR DETERMINATION OF EOT

• NO TIME LIMIT FOR MAKING DETERMINATION BUT MUST NOT UNREASONABLY BE WITHHELD OR DELAYED BY JAZZ.

PAM (2006)

EOT AND LOSS AND/OR EXPENSE IS IN TWODIFFERENT CLAUSES 23.0 AND 24.0

RESPECTIVELY IN THE PAM FORM

UNLIKE

IN FIDIC WHICH IS BOTH UNDER ONE CLAUSE.

ASSUMING PICASSO IS THE CONTRACT ADMINISTRATOR

EXTENTION OF TIME – CLAUSE 23.0BEFORE GRANTING EOT THE JAZZ SHALL CONSIDER THE FOLLOWING :

• THE APPLICATION MUST BE IN WRITING • THE CAUSE OF DELAY MUST BE WITHIN THE PROVISIONS OF THE

CONTRACT (I.E. RELEVANT EVENTS STATED IN CLAUSE 23.8)• CAN DO MUST HAVE TAKEN ALL PRACTICAL STEPS TO MITIGATE

(PREVENT OR REDUCE) DELAY • THE DELAYS MUST HAVE ‘MATERIALLY’ DISRUPTED THE REGULAR

PROGRESS OF THE WORKS, RESULTING IN THE COMPLETION DATE BEING BREACHED

• THE ‘NETT EFFECTIVE’ DELAY MUST BE ASSESSED BASED ON APPROVED WORK PROGRAMME IN RELATION TO THE WHOLE OF THE WORKS.

AFTER PICASSO HAS COMPLETED HIS ASSESSMENT, HE HAS TOMAKE EITHER OF 2 DECISIONS:

1) REJECT THE CONTRACTOR’S APPLICATION, STATING THE REASONS; OR

2) GRANT AN APPROPRIATE EXTENSION OF TIME AND ISSUE THE CERTIFICATE OF EOT, STATING THE FOLLOWING:

• AN ANALYSIS OF EACH EVENT CAUSING THE DELAY • THE NO. OF DAYS GRANTED FOR EACH EVENT• THE TOTAL NO. OF EOT AND THE NEW COMPLETION DATE • A BREAK-DOWN OF THE ‘EVENT-BY EVENT’ WITH THE RELEVANT

REASONS.

TIMING OF ISSUE :

• WITHIN 6 WEEKS FROM THE DATE OF RECEIPT OF SUFFICIENT PARTICULARS; OR

• IF PICASSO CANNOT ISSUE EOT WITHIN 6 WEEKS, HE SHALL INFORM CAN DO FOR AN EXTENSION AND GET HIS CONSENT; OR

• IF PICASSO CANNOT DETERMINE THE EOT REQUIRED, HE MAY ISSUE A ‘PROVISIONAL’ EOT AND LEAVE IT FOR REVIEW AFTER PRACTICAL COMPLETION (CLAUSE 23.10)

LOSS AND/OR EXPENSE - CLAUSE 24.0

• BY RELEVANT EVENTS LISTED IN CLAUSE 24.3

• PICASSO SHALL ASCERTAIN THE AMOUNT OF LOSS AND/OR EXPENSE.

• THE AMOUNT ASCERTAINED FROM TIME TO TIME SHALL BE ADDED TO THE CONTRACT SUM

• IF INTERIM CERTIFICATE IS ISSUED AFTER THE DATE OF ASCERTAINMENT, IT SHALL BE INCLUDED IN THE CERTIFICATE.

CONTRACTOR’S COMMON LAW RIGHTS UPON REJECTIONOF HIS CLAIMS:

• CAN DO MAY BE ABLE TO PURSUE HIS CLAIM UNDER COMMON LAW FOR DAMAGES.

• HE CAN ONLY DO THIS, PROVIDED HE HAS SATISFIED THE CONDITION PRECEDENT UNDER CLAUSE 24.1(A) REGARDING WRITTEN NOTICE

QUESTION 14

IF THE STANDARD FORM OF CONTRACT IS THE AGREEMENT AND CONDITIONS OF PAM 2006 (WITH QUANTITY), DISCUSS THE RULES TO BE CONSIDERED BY GULP (IN THEIR CAPACITY AS THE NAMED QUANTITY SURVEYOR) WHEN VALUING THE VARIATIONS RELATING TO THE RECONFIGURATION OF

THE BEDROOMS.

PAM 2006 (WITH QUANTITIES)• Clause 11.5 Valuation Of Variations And Provisional SumsAll variations shall be measured and valued by the Quantity surveyor. Where any recording of the site information and/or site measurements are carried out at the site, the Contractor shall provide the Quantity Surveyor with such assistance as may be necessary to carry out the works and the Contractor shall be given opportunity to be present to take such notes and measurements as he may require”• Clause 11.6(a) Valuation Rules“Where work is of similar character to, is executed under similar conditions as, and does not significantly change the quantity of work as set out in the contract documents, the rates and the prices in the contract documents shall determine the valuation”• Clause 11. 6(b) Valuation Rules“Where work is of similar character to work as set out in the contract documents but is not executed under similar conditions or is executed under similar conditions but there is a significant change in the quantity of work carried out, the rates and prices in the contract documents shall be the basis for determining the valuation which shall include a fair adjustment to the rates to take into account such difference”• Clause 11.6 (C) Valuation Rules“Where work is not of similar character to work as set out in the contract documents, the valuation shall be at fair market rates and prices determined by the quantity surveyor”

Rules to be considered by gulp in when valuing the variation relating to the reconfiguration of the bedrooms:1. Re-measure the site on the variation work2. Establish nature of work:i. Works of similar character and executed under similar conditions and does not significantly change

quantity of workii. Works of similar character to work set out in contract documents but not executed under similar

conditions OR works of similar character to work set out in the contract document, executed under same conditions but there is a significant change in the quantity of work involved

iii. Work is not of similar character to work set out in contract document

3. Value variations according to the valuation rules of the nature of work.iv. Rates and prices in contract documents shall determine valuationv. Rates and prices in contract documents shall be the basis for determining the valuation; including fair

adjustment in the rates to take into account such differencevi. Fair market rates and prices determined by the quantity surveyor

QUESTION 15

YOU HAVE BEEN REQUESTED BY JOLLY TO ASSIST IN DRAFTING THE LETTER OF ACCEPTANCE. ON THE ASSUMPTION THAT THE CONTRACT FORM IS THE AGREEMENT AND CONDITIONS OF PAM CONTRACT 2006 9 WITH QUANTITIES), PREPARE A DRAFT LETTER OF

AWARD TO BE ISSUED BY PICASSO AND PRESENT IT TO THE CLASS

*** REFER TO ATTACHMENT***../DOWNLOADS/QUESTION 15- REVISED LOA.PDF

QUESTION 16 (A)

OUTLINE THE PROCEDURE THAT JAZZ AND CAN-DO MUST COMPLY WITH WHEN DEALING WITH THE CLAIM FOR ADDITIONAL PAYMENT ARISING FROM THE COLLAPSED TEMPORARY WORKS

CLAUSE 20.1 FIDIC

• Procedure for Can-Do ( contractor)1. Contractor shall give notice within 28 days after the date on which the contractor

become aware, or should have become aware of the relevant event or circumstances 2. *After 28 days, the contractor is deemed to have waived his rights to:i. Claim for extension of timeii. Additional paymentiii. And employer is discharged from all liability connected with the claim. 3. Supporting particulars should be provided by the contractor and the contractor should

also maintain such contemporary records as may be needed to substantiate claims. 4. Contractor to allow inspection of records and if requested, submit copies.5. A claim with continuing effects, contractor should submit an interim claim at intervals

as required by engineer

• *Case law• Supported by case of Bremer Handelgesellschaft Mbh V Vanden Avenne

Izegem Nv,• House Of Lords held that provisions should be construed as a condition

precedent, and so would be binding if:• It states the precise time within which the notice is to be served, and• It makes plain by express language that unless the notice is served within

that time, the party making the claim will lose its rights under the clause.

Procedure For Jazz (Engineer/Contract Administrator)1. Engineer may monitor record-keeping and instruct for further records if necessary2. Engineer has 42 days from receipt of fully detailed claim to respond his approval, disapproval or

detailed comments. 3. Engineer may also request further particulars.4. No time limit for making decision, but must not unreasonably withheld or delayed However, in this case, there was an absence of agreement of extension of time because Employer has instructed for the sub-clauses to be omitted from the Contract. Hence, the Engineer will determine a fair extension while considering; i. Causes of delay, ii. Effect of a review of any previous determinations of time extension which may result in in an

increase, but not decrease in total time of extensioniii. Notifies contractor

16 (B)

IF THE CONTRACT FORM IS THE AGREEMENT AND CONDITIONS OF PAM CONTRACT 2006 (WITH QUANTITIES) HOW WILL YOU ADVICE PICASSO AND CAN-DO ON THE CLAIM FOR

LOSS AND EXPENSE?

1. Clause 24.1 Loss And/Or Expense Caused By Matters Affecting The Regular Progress Of The Works

i. 24.1 (A) ii. 24.1 (B) 2. Clause 24.3 (a-n) Matters Materially Affecting The Regular

Progress Of The Works

ADVICE FOR CAN-DO• If Can-do (contractor) expects that the regular progress of works is likely to be materially

affected by matters expressly referred in clause 24.3, and he is likely to incur loss and/expense which cannot be reimbursed by payment made under other provisions in the contract he may make a claim for such loss and/or expense

• The Contractor has to submit written notice to architect (Picasso) on his intention to claim for loss and/or expense with initial estimate of his claims, duly supported by documents

• Notice shall be given within 28 (days) from date of AI, CAI or start of occurrence of matters stated in clause 24.3

• Within 28 (days) after matters referred to in clause 24.3 have ended, Contractor shall send to the Architect and Quantity Surveyor complete particulars of his claims for loss and/or expense together with all the necessary calculations to substantiate his claims

• If contractor fails to do (4) within the stated time or within periods as agreed in writing by Architect, it is deemed that he has waived his rights for loss and/or expense

• ADVICE FOR PICASSO1. Architect must ensure that Contractor submitted his notice of intention to claim in

writing2. Architect must ensure the notice is submitted within 28 (days) upon the occurrence

of matters in 24.3 and date of the AI and CAI3. Architect must ensure the Contractor submits the complete particulars of his claim

for loss and/or expense together will all necessary calculations to substantiate his claims within time stated or agreed period in writing by architect

4. Architect must assess if the matters claimed by the Contractor is expressed in clause 24. 3